Don't Put The Family On Hold

John and Crystal are calling because they only owe $800 on their car before attacking the $135,000 in student loans. They want to start a family, but Crystal is hesitating because of the loans. What do they do?

QUESTION: John and Crystal in Detroit are calling because they only owe $800 on their car before attacking the $135,000 in student loans. They want to start a family, but Crystal is hesitating because of the loans. He has a government job that will forgive the loans in 10 years. Dave gives John and Crystal his take.

ANSWER: So we have a $70,000 household income and $135,000 in student loan debt to get an MBA to become a police officer. I don’t think that you wait on getting out of debt to have babies unless it’s extreme circumstances of some kind, and this is not. You can work with this.

Let the government pay this off after 10 years of payments, and you pay the minimum payments you can pay. However, I want you to systematically save the balance in a savings account as if you were paying off the debt. In other words, if we’re four years into this 10-year plan, and we look up and there’s $90,000 owed and you have $90,000 in the bank and you decide that God’s calling you to go do something else, you’re not handcuffed. You write a check and pay it off. Ten years is a long time of doing life for things to turn out exactly like you think they’re going to. They never do. I don’t like that plan of counting on them to pay it off, but I don’t mind taking advantage of it if that’s how the deal goes down.

I’m going to continue the debt snowball, but instead of giving them the money, I’m going to pile it up in a savings account. In the meantime—and since there may be babies in the future—we need to save a better emergency fund than $1,000. We need to start moving toward that three-month mark.

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